Drug major Cipla has violated a US court order, which may lead to seizure

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of the existing inventory of a flea and tick repellent for pets manufactured by it.

The issue relates to tick repellent ‘FrontLine Plus’, estimated to have had sales of $700-900 million last year. The drug belongs to the $2.6-billion Merial, a Sanofi company that makes animal-focused products.

FrontLine Plus is the leading veterinary pesticide in the US and its cheaper generic product market is also lucrative, said industry analysts who wished to remain anonymous. As per the order of the US district court for Middle District of Georgia delivered last week, Judge Clay D Land found Cipla in contempt of a March 2008 default judgment that prohibited the company from infringing Merial’s patent, and held that US-based drug firm Velcera had acted in concert with the Indian company in its violation. Velcera sold the generic version of FrontLine Plus as PetArmor Plus while Cipla was the contract manufacturer.

The court has ordered that Cipla and Velcera would be permanently prohibited from engaging in the sale of these drugs but given the potential immediate and serious impact of the order, its enforcement will happen only after 60 days.

This window has been given to provide them an opportunity for meaningful review, a copy of the order accessed by Financial Chronicle showed.

The court will also conduct a hearing to determine an award to Merial for damages relating to all sales committed in violation of the court’s order, including lost profits or a reasonable royalty for all sales. In 2010 itself, sales of FrontLine and related products slumped from $320 million in the first quarter to around $150 million in the fourth quarter. Details of the generic sales were not available.

Cipla and Velcera have been asked to provide in writing within 60 days of last week’s order, details relating to sale of any veterinary pro-duct containing fipronil and methoprene manufactured by Cipla after the March 2008 order. Fipronil and methoprene are bulk drugs that make a chemical formulation used for Merial’s FrontLine Plus.

Velcera said in a statement that the court has sta-yed its order to allow for an appeal to the US Court of Appeals for the Federal Circuit.

We cannot comment further on this on-going litigation, said Steve Dickinson, Head of Global Corporate Communications, Merial.